Fitch upgrades AmBank

Fitch Ratings said it upgraded the long-term foreign currency rating of Malaysia's AmBank (M) Bhd. to BBB- from BB minus, the short-term foreign currency rating to F3 from B, the individual rating to C/D from D/E and affirmed the bank's 3 support rating.

The outlook is stable.

The upgrades follow the bank's financial progress since merging with its larger and relatively stronger sister company AmFinance in June 2005. The merged AmBank has a considerably improved business and financial profile, its business is more oriented toward consumer banking and its profitability is significantly better compared with its standalone position, the agency said.

Fitch noted, however, that ongoing competitive market conditions and a rising interest rate environment may affect the bank's profitability, particularly that of its fixed-rate hire-purchase portfolio, though the bank's ability to progressively raise the share of its low-cost funds as is its intention should act as a slight mitigant.

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